The sales forecast is a look at projected versus actual sales. Once you have an idea of what future sales will be, you will be able to build your crafting capacity to meet all or some of the customer demand. Based on your crafting capacity and sales forecast, you will want to create reports to track financial performance. You may choose to report on the following—

• Unit sales (by product category)
• Unit prices (by product category)
• Sales revenue (by product category)
• Unit costs (direct, by product category)
• Cost of sales (direct, by product category)

Another consideration as you prepare to implement your marketing strategy is how much it will cost to realize your marketing plans. There may be costs associated with advertising, customer incentives, consignment commissions, materials and staffing. Creating a budget will allow you to plan for and track your expenses related to marketing activities.

In addition to financial metrics, you may decide to track marketing metrics. These are metrics that will help you assess how well your marketing tactics are working. Some key metrics are

• Total revenue ($)
• Revenue per customer ($)
• Revenue per marketing dollar spent ($/$)
• # Leads
• Lead conversion rate (%)
• Average transactions per customer
• # Referrals
• Customer testimonials

With the creation of the sales forecast and the marketing budget, the marketing plan is complete. You now have all the information and tools needed to successfully take your craft to market.

Remember that, like the business plan, the marketing plan is a living document that should be revised periodically to reflect current market conditions and up-to-date information about your business goals and objectives.

An example of a market opportunity summary is below—

We will begin displaying ZanyDoodles in consignment shops around the area in January of next year. We will attempt to position our product as the high-quality, moderately-priced alternative, stressing profit over market share.

In this example, we have alluded to who the target customer is, where the product will be sold and when, and to how the craft will be positioned to sell in the overall market. From here, it is possible to identify competitors, assess competitor market share, and strategize about how to gain a share of the market.

As you develop the SWOT analysis, you should consider how you intend to meet customer needs. You should prepare a customer analysis by outlining your prospective customer groups and their respective needs. Then, you will be able to assess the products and/or services that you will provide and detail the benefits of these products and services.

Once you know your customer, your product or service, and your competitors’ prices, market share, strengths and weaknesses, you can measure how you rank in these key areas against how each of your competitors rank. This will be the core of your assessment of your strengths, weaknesses, opportunities and threats. With the SWOT analysis complete, you should be able to articulate your competitive advantages and any areas that require improvement. You should identify ways to fill any gaps that would improve your craft’s marketability.

In Part 4 of this series on Market Planning, we will take a closer look at Sales Forecasting and the Marketing Budget.

The Marketing Strategy should be an in depth examination of why you are in business or why you aspire to be. If you’ve dreamt of owning your own business, the reasons should be articulated in the strategy section of your marketing plan. If you’ve always wanted to make money doing what you love, this motivation should be reflected in the vision / mission statement of the marketing strategy. Also, your goals and objectives should be clearly stated here with a little information about how you intend to position your product or service to sell in a particular market.

As you develop your marketing strategy, consider the following questions and spend time fleshing out the answers in the strategy section of your marketing plan—

• Why do you want to be in business?

• What are your business goals and objectives? What do you hope to achieve by selling your crafts or crafting services?

• Who is your target customer? What does your customer want?

• What makes your craft or craft idea unique or valuable?

• What product or service innovations will you take advantage of?

• How will you generate customer leads?

• Will you make use of social networking opportunities and online communities?

• Will you utilize referral incentives? If so, what are they and how will you utilize them?

• How will customer leads be converted into sales revenue?

• What will constitute a good customer experience? How will you ensure this experience?

These are a few of the questions that should be addressed in your market strategy. Thinking through the answers to these questions will enable you to better position your craft to sell to your target market.

In Part 3 of this series on Market Planning, we will explore the components of the Market Analysis.

The marketing plan should be tailored to fit your unique situation, but it should contain a few key elements in order to be a successful guide in helping you plan your business needs. The standard components of a marketing plan are the following—

• Marketing Strategy—which includes a discussion of the vision/mission of your business, your goals and objectives, and information about product positioning and target markets.

• Market Analysis—which should include a statement of strengths, weaknesses, opportunities, and threats (or SWOT analysis) along with an analysis of the competition. Also, the market analysis will include information about market needs and customer characteristics.

• Sales Forecast—which is a summary of actual past sales and projected sales by month and by year. You may also want to include details about sales by product category, sales region, and /or market segment.

• Marketing Expense Budget—which should detail expenses for marketing-related activities. Ideally, the expense budget will include information about sales tactics, management responsibilities, and other sales and marketing spend items.

In Part 2 of this series on Market Planning, specific details about each of these four segments of the marketing plan will be discussed.

In planning for the success of your crafting business, begin by setting goals and evaluating resource requirements. It’s best to understand the necessary time commitment early on in order to shape the scope of your business plans. Understand your financial goals as well as the tools, equipment and other resources that are required to help you achieve your dreams. Begin planning for your craft business by developing a comprehensive business plan.

The business plan is a reality check that will reassure you and others that your business ideas are feasible. The plan will help you evaluate resource requirements, both physical and financial, that will enable you to achieve your business goals. The plan will also help you understand the market potential of your craft business by identifying competitors and potential customers as well as clearly outlining timelines, schedules and forecasts. In a nutshell, the business plan will enable you to set realistic goals.

Consider preparing the business plan yourself. The process of developing the plan will help you manage the scope of your business ideas, guide implementation, and may stir other ideas that are more feasible or more lucrative. Seek assistance from consultants with developing areas of the business plan that may not be familiar to you. Use a standard, professional format in case you decide to share the plan with investors or business consultants who will be expecting certain elements to be addressed in a comprehensive plan.

Your ultimate success in launching a craft business will hinge on how well you understand and can articulate your business ideas. Above all, know why you want to sell your crafts and have a good understanding of how to bring them to market.

Try showcasing a sense of humor while negotiating. Humor can often break the ice and put counterparties at ease, making them more willing to broker a deal, grant concessions or at the very least listen more openly. When the negotiating climate is easy-going, better deals are made.

Be self-assured. Projecting confidence will encourage counterparties to trust that what is being presented is the truth and worthy of consideration. Part of being self-assured is being prepared: know the issues that are relevant to the negotiation and prioritize their importance from your point of view. By acknowledging the relative importance of all the issues, you will be in a better position to concede or fight for them according to how they impact your position in the negotiation.

Some other traits to hone so that you may project likeability are honesty, patience and trustworthiness. Think of traits that you admire in your friends, family and business associates, and these are the traits that you should bring with you to a negotiation. Always keep in mind that people are more open to negotiating when they like the ones with whom they are negotiating. First and foremost in negotiations, be likeable.

Three measures of forecast error or variability are mean square error (MSE), mean absolute deviation (MAD) and mean absolute percentage error (MAPE). These measures of variability are used to determine the standard deviation of forecast errors of total demand over the replenishment lead time, which is then used to estimate safety stock levels.

Mean Square Error (MSE)

The mean square error fits squared errors along a straight line to historical data.

Mean Absolute Deviation (MAD)

The mean absolute deviation is the absolute value of the difference in forecasts over a fixed time period.

Mean Absolute Percentage Error

The mean absolute percentage error reports variability as a percentage of the nominal forecast and, therefore, is not affected by the magnitude of demand.

When using these measures of forecast error to estimate the demand over a replenishment lead time, it is important to note that the forecasting timeframe is often different than the expected replenishment lead time. An adequate correction for this difference is to multiply the standard deviation of forecast errors by the expected lead time.

Know Your Audience – Who

You wouldn’t use a commanding tone with a client, would you? Probably not, but you might with a subordinate or junior associate. Suffice it to say, it’s important to recognize with whom you’ll be communicating so that you can achieve the best outcome by what you say and how you say it. Once you’ve determined to whom you will be or should be talking, you can choose a diction, tone and mode of delivery best suited for the situation.

Have Something to Say – What

All forms of communication begin with having something to say. What do you need your client to know about your product or service? What information does your supplier need to provide you with the right manufacturing components? The ‘what’ is the substance of communication, without which nothing need be said.

Be Effective and Efficient in Delivery – How

Should you drop by, send an email, make a phone call to communicate the what to the who to get it done? Well, that depends on what you have to say and to whom, right? Usually, that is the case, but sometimes the mode of delivery is determined by other factors, such as expediency or proximity. If your client is halfway around the world, you would not likely drop by. An email or a phone call would probably be sufficient. Likewise, you probably would not send an email to a colleague in the next office, except perhaps if you have lots of data or many electronic files to share. As you can see, the mode of delivery of every communication depends on who and what and sometimes on other pertinent factors.

Now that you’ve been introduced to the who, what and how of effective communication, you should also keep in mind a few other aspects that will improve your communication outcomes—

• Be clear and concise
• Allow for two-way communication
• Be open to feedback

These few techniques will allow for easy flow of information that will enable your business to thrive and grow.

Decreasing Service Time

One way to reduce customer wait time is to decrease the expected service time. This can be accomplished by identifying best practices among all the servers, standardizing processes based on best practices, and enhancing training to ensure that best practices are followed. Also, you may choose to offer employee incentives that encourage working faster as a way to decrease service time.

Decreasing Arrival Rates

Another way to impact customer wait time is to decrease the rate at which customers arrive to be served. If your service operation experiences peak service hours, i.e. certain times of the day when your customers prefer to be served, then you could offer customer promotions geared to increase traffic during off-peak times. For example, if your customers tend to arrive for service after work from 5 pm to 7 pm, then you could offer product or service discounts during daytime hours or late evening hours when wait times are shorter.

Increasing the Number of Servers

Finally, by adding more servers you will be able to impact customer wait time. The more servers there are, the less wait time a customer will experience.

However, there are usually increased costs associated with increasing service capacity. There are costs to employ more workers, to provide more or better training, and to offer customer and employee incentives. For this reason, it may not be economically beneficial to strive to eliminate service delays completely, but rather you should try to reduce wait times to below the customers’ tolerance threshold for waiting.

Infrequent service delays may be unavoidable, but you should attempt to avoid aggravating your customers to the point that it undermines your profitability.

Statistically, any winning bid is likely to be cursed, unprofitable in the end, if there are many bidders participating. The more bidders there are, the more competitive the bidding. So the winning bidder among lots of bidders is more likely to have underestimated the cost to complete the work. Therefore, it is probably better to lose a contract in a narrowly contested bidding war with lots of bidders, than to risk underestimating the work in order to win the contract.

It is often better to seek contracts with fewer bids in play, since the bid price that wins the contract is more likely to be a fair price that does not underestimate the cost to do the job. With only a few bids, the winning bid will probably be more profitable than if there are a lot of bids.

The best way to avoid the Winner’s Curse is to be selective in your bidding practice. Don’t bid on every contract, and certainly avoid situations where there are lots of bidders and a greater chance of underestimating the cost to do the work.

You should also add a contingency factor to your bid estimate; this factor should reflect how much you could be underestimating the cost of doing the job. With the contingency factor in place, you may not win as many bids, but you will be less likely to feel cursed in the end.